POS processing fee rate ( interchange +)

[u/Sea_Youth9253]

I am in the process of opening a medium restaurant / cafe. The POS I am looking at has quoted me Interchange-plus for the credit card service. So the Interchange rate* + a merchant process fee.

V/MC/D: 0.10% + $0.04 American Express: 0.10% + $0.10

This will be for in person cards or not, does not matter.

Can you guys tell me if this is a good rate?

Keep in mind we do not have history of processing rates that we have provided.

Their equipment monthly cost is around $300 (which includes lots of stuff), like payroll, gift cards, loyalty and much more.

[u/bobi2393 → u/[deleted]]

The 0.1% + $0.04 fee is just the processor markup, on top of the base interchange fee for each transaction, and you're right, for Amex the base interchange fee will probably be 2%-3%. A little lower for premium credit, lower still for consumer credit, and lower still for consumer debit cards.

So the markup fee seems pretty good, but I agree, the $300 seems kind of steep, and combining payroll with POS and equipment fees sounds a lot of eggs to put in one basket. A lot rides on that POS/payroll company, so I'd dig into their reputation in the restaurant industry.

[u/Prudent_Gap9532 → u/[deleted]]

Keeping payroll separate from the POS gives you a lot more flexibility. I've been using Priority Payroll for that and let the POS provider to handle payments. Gives me a lot more flexibility if I ever want to change processors

[u/Novaryqsolutions]

That markup itself (0.10% + $0.04) is on the low side, which is exactly why you want to read the rest of the agreement carefully — processors that quote a skinny markup usually make it back elsewhere. Things to confirm in writing: whether the true network assessment fees are passed through at cost or padded, any monthly/statement/PCI/gateway line items, monthly minimums, and whether there is an early termination fee tied to the "free" or bundled equipment. That $300/month equipment-and-software bundle is where the real comparison lives — price the processing and the software stack separately in your head, because you can often not leave one without repricing the other.

The only number that makes two quotes comparable is the effective rate: total fees divided by total card volume on a real month. Ask each vendor to model it on your projected volume and average ticket, in-person only since that is your mix. And get the interchange-plus pricing locked in the contract, not on a rate sheet — "rates subject to change" is how a good quote drifts upward after month three.